Simple Interest

Front

What is Simple Interest?

Back

Simple Interest is a method of calculating the interest charge on a loan or financial product. It is calculated using the formula: Interest = Principal × Rate × Time.

Front

What is the formula for calculating Simple Interest?

Back

The formula for calculating Simple Interest is: I = P × r × t, where I is the interest, P is the principal amount, r is the rate of interest per year (in decimal), and t is the time in years.

Front

How do you convert a percentage to a decimal?

Back

To convert a percentage to a decimal, divide the percentage by 100. For example, 14% becomes 0.14.

Front

If you deposit $1,500 at an interest rate of 3% for 5 years, how much interest will you earn?

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Interest = 1500 × 0.03 × 5 = $225.

Front

What will be the total amount in the account after earning interest?

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Total Amount = Principal + Interest. For the previous example: Total Amount = $1,500 + $225 = $1,725.

Front

What is the principal amount in a simple interest calculation?

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The principal amount is the initial sum of money deposited or borrowed before interest is applied.

Front

If a loan has a simple interest rate of 5% for 4 years, how do you find the total interest paid?

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Total Interest = Principal × Rate × Time. If the principal is $39,100, then Interest = 39100 × 0.05 × 4 = $7,820.

Front

How much will you have in your account after 1.5 years if you deposit $725 at 2% interest?

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Interest = 725 × 0.02 × 1.5 = $21.75. Total Amount = $725 + $21.75 = $746.75.

Front

What is the total amount after 50 years if you deposit $1,000 at 7.5% interest?

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Interest = 1000 × 0.075 × 50 = $3,750. Total Amount = $1,000 + $3,750 = $4,750.

Front

How do you calculate the total amount after a certain time with simple interest?

Back

Total Amount = Principal + (Principal × Rate × Time).